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NFL Commissioner Roger Goodell should be thrilled about the $765 M settlement of the league's concussion lawsuit with players, given that it represents a mere 2.7% of the $28 B in media revenue the league will receive from CBS, Fox, and NBC between 2014 and 2022.

Roughly 24 hours after processing the news of the NFL's $765 million concussion settlement which will help compensate impacted players and families while providing funds for baseline testing and greater education/research, I started thinking more about the matter from the perspective of a labor and vocational economist.

Vocational economics is a field of research that examines the degree to which an individual is financially harmed as a result of physical and/or cognitive injury wrongfully sustained. Such injuries can negatively impact the victim's financial wherewithal in numerous ways:

(1) Diminished capacity to earn market wages or income relative to their physical/cognitive abilities pre-injuries;

(2) Diminished work benefits (e.g. pensions, stock options, social security) if one's labor force participation is shortened compared to what they would have earned but for the injuries;

(3) Greater medical costs (e.g. rehabilitation, medicine, therapy) incurred above and beyond what would likely have resulted but for the injuries.

The 'but for' world (i.e. assessing a person's lifetime earnings, lifetime labor participation levels, and lifetime medical expenditures incurred had they not been a victim of preventable injuries) may seem quite abstract, but there are exhaustive tables that provide population estimates for all of these variables depending upon a person's preexisting education level, work experience, occupation, earnings stream, and medical history.

Recognizing how complicated the vocational and forensic calculations can become, let's simplify the discussion by supposing that the median plaintiff among the 4500+ players named in the concussion lawsuit (1) began experiencing some negative cognitive effects from playing professional football starting at the age of 40, (2) would otherwise possess work characteristics (e.g. education and experience) that would have enable them to average an annual salary somewhere between the U.S. per capita income (approx $43,000) and the median annual earnings for college graduates (approx $55,000), and (3) would otherwise plan on working until age 65 (i.e. 25 years). To further simplify the calculations for illustrative purposes, we will not get into present value calculations.

Under these assumptions, the lifetime earnings (i.e. cumulative earnings between 40 and 65) would range between roughly $1.1 M and $1.4 M. Under the settlement, award caps were set at $5 million for players with Alzheimer's, $4 M for families who lost loved ones due to CTE, and $3 million for players with dementia. So just based on these figures, seems like the players/families most negatively impacted by cognitive injuries are being well compensated.

But the $1.1 M to $1.4 M earnings range only accounts for wages or income, not benefits. If benefits add another 20-30% to lifetime earnings (which is a conservatively low range), that's another $220 K to $420 K.

OK...still not a bad deal for the players. Now let's add the medical costs incurred.

In a conversation with Dr. Robert Levy, Clinical Assistant Professor of Emergency Medicine at Stony Brook University as well as the Director of Performance Improvement for the Department of Emergency Medicine, he could not emphasize enough how costly it can be for individuals and families to deal with the medical expenses associated with Alzheimer's and dementia.

"These are the diseases that doctors themselves don't want to suffer though", Levy emphasized. "Some research studies which estimate that the cost of caring for such patients is three-times greater than a typical Medicare recipient under-represent the true costs of treatment."

Dr. Levy confirmed that the annual costs of treating patients with either disease could vary widely (between $50,000 to $200,000 annually depending upon severity...though not inconceivable to rise even beyond this range). If such costs are incurred annually over a 5-10 year period and then added to the foregone compensation discussed above, then the max caps look less appealing for those players most traumatized by diminishing cognitive abilities.